Advisors to big institutions increasingly are working for well-heeled individuals, too. The key to success in these arrangements could be just how well-heeled the investor is.

Endowments, foundations, and other institutions insist on process, discipline, and predictability. Some individual investors do as well—but they're the exception. Even directors of endowments and foundations, who see the advantages of institutional investing firsthand, sometimes fail to apply those sensible standards to their own money, says John Barrett, an advisor with Merrill Lynch in New York City.

"It's surprising to me that when we deal with [directors] on personal things, they forget all the attributes that...